The recent webinar on global compensation, employment, pensions, and governance brought together a panel of employment and compensation lawyers from various jurisdictions who discussed future shifts in employment law following the recent U.S., U.K., and EU elections. Moderated by Inge Vanderreken, the discussion featured insightful contributions from John Cannon, Arnold Keizer, and Gordon Bartlett. The main focus of the event was on significant employment law changes anticipated in different regions, particularly concerning diversity and inclusion (DE&I) and worker reclassification.
U.K. Employment Law Developments
The Employment Rights Bill
The U.K. is poised for substantial changes under the Employment Rights Bill, which is extensive and will significantly alter workplace dynamics. Despite its characterization as “pro-worker and pro-business,” the bill leans strongly in favor of workers due to enhanced protections in various areas. Businesses, as a result, will face increased costs and greater compliance burdens. The combined reforms relating to workplace harassment mark a notable shift, necessitating organizations to prioritize measures against sexual harassment. This area will demand significant attention from companies to mitigate risks effectively and proactively.
The employment landscape in the U.K. will see a unique interplay between the business community’s need for operational flexibility and expanded worker protections. Companies, especially large corporations with extensive HR operations, may find themselves navigating a complex array of new requirements. Addressing these mandates will likely involve revising existing policies, ramping up training for employees and managers, and instituting robust internal investigation mechanisms to handle complaints. Companies must stay ahead by staying informed and prepared to avoid any potential legal repercussions stemming from non-compliance. The push towards ensuring a safe and harassment-free workplace is clear, necessitating a proactive approach for the foreseeable future.
Workplace Harassment Reforms
Workplace harassment reforms in the U.K. are expected to bring a paradigm shift with significant emphasis on combating sexual harassment. Companies will need to adopt comprehensive policies and training programs to ensure a safe working environment. Enhanced protections mean that businesses will not only have to implement but also actively enforce stringent measures to prevent harassment. This will include frequent and thorough training sessions aimed at educating employees about recognizing and reporting harassment. With heightened scrutiny, companies must prioritize creating and maintaining a workplace culture that zeroes in on respect and dignity for all employees, ensuring comprehensive compliance with new regulations.
These new regulations will likely prompt increased scrutiny and potential litigation, making it crucial for employers to stay well ahead of compliance requirements. Prompt and effective response mechanisms to handle complaints of harassment will become a standard. Companies should be prepared for more robust oversight by regulatory bodies, potentially leading to audits of their harassment policies and practices. Moreover, the evolving legal landscape might encourage employees to seek redress more readily, driving companies to continuously evaluate and refine their measures to discourage any harassment at their workplaces. The emphasis on stringent anti-harassment measures hopes to foster not just compliance, but a significant cultural shift within organizations.
EU Employment Law Trends
Legislative Simplification and Sustainability
The European Commission has committed to simplifying legislation, with a particular focus on sustainability. This simplification does not imply a reduction in requirements. Future legislative developments will be fewer but more focused on addressing skills and labor shortages and promoting social dialogue. The EU’s dedication to diversity and inclusion remains unwavering, with the implementation of the Pay Transparency Directive by mid-2026 necessitating early preparation from employers to meet disclosure obligations. The initiative aims at creating a more inclusive and fair workforce, pushing companies towards greater transparency in their employment practices and ensuring adherence to fair pay principles.
Employers will need early and diligent preparation to meet the disclosure obligations set out by the legislation to avoid potential legal challenges. The push for sustainable and inclusive policies means businesses must integrate these principles into their core operations. The EU’s streamlined approach to legislation focuses on making compliance less burdensome by reducing red tape while maintaining high standards. This means organizations must focus on collaborating with key stakeholders, including employees and unions, to create conducive work environments that align with new legal standards. Staying informed about upcoming changes and preparing for compliance ahead of deadlines will be crucial for companies operating in the region.
Pay Transparency Directive
The Pay Transparency Directive is expected to spur litigation, emphasizing the importance of transparency in pay practices. Employers will need to prepare early to meet disclosure obligations and avoid potential legal challenges. This directive underscores the EU’s commitment to ensuring fair pay and reducing gender pay gaps, making it a critical area for businesses to focus on in the coming years. Transparency is key; companies will need to establish systems that allow mapping and reporting on pay structures and justifying any discrepancies found. This advance preparation will pave the way for smoother transitions once the directive takes full effect, mitigating risks associated with non-compliance.
The directive also emphasizes the EU’s focus on cultivating a transparent work culture where equal pay is prioritized and effectively monitored. With the looming mid-2026 implementation date, employers must hit the ground running, evaluating their current pay structures and ensuring they align with the directive’s requirements. Regular audits and pay reviews will become part of the compliance toolkit, helping to identify and address disparities early. Additionally, businesses might need to adapt their payroll and HR technology systems to generate the necessary reports and data analytics to support compliance efforts tangibly and transparently.
Platform Directive and Reclassification
The newly adopted Platform Directive at the EU level, though significant, is not anticipated to revolutionize worker reclassification immediately. National developments across member states are likely to have a more pronounced impact. Employers will need to stay informed about changes in their respective countries to ensure compliance and adapt to fresh worker classification standards. The directive aims to provide a standardized approach, but each member state will interpret and implement these guidelines in a manner that fits their individual labor markets. Companies must be nimble in their responses, adapting to national directives while aligning with overarching EU laws.
The emphasis will be on how these national developments translate to practical, on-the-ground changes in worker classifications. Businesses with operations across multiple EU countries will face the challenge of managing different labor regulations in each jurisdiction. They need robust frameworks capable of catching up with and adhering to localized requirements. The dynamic nature of these reforms necessitates continuous monitoring and adaptation to changing legal landscapes. Staying compliant will require a keen understanding of both EU directives and national laws, employing expert legal advice where needed, to navigate these complex regulatory terrains effectively.
U.S. Employment Law Changes
Biden Administration Initiatives
In the U.S., many of President Biden’s key initiatives, such as the FTC’s ban on non-compete agreements, the proposed expansion of overtime eligibility under the Fair Labor Standards Act (FLSA), and the ESG investment rule of the Department of Labor (DOL), have encountered delays and opposition from conservative Federal courts prior to the election. The incoming Trump administration, which opposes these initiatives, is expected to cease defending them and likely rescind them. These anticipated policy reversals present significant implications for businesses and workers alike, signaling a reversion to past practices that favored fewer restrictions and broader discretionary powers for employers.
The potential for these policy reversals could mean that businesses will face fewer compliance challenges in the near term but will need to remain vigilant about potential state laws that might impose stricter regulations. The Biden administration’s focus on expanding worker protections aimed to increase transparency and fairness in employment practices. In contrast, the Trump administration’s rollback will likely prioritize business flexibility and economic freedoms at the expense of broader worker protections. Companies will need to stay agile, adjusting their policies according to federal changes while considering state-specific regulations that might contradict these rollbacks.
Impact on DE&I and Affirmative Action
Affirmative action faces increasing challenges following the Supreme Court’s decision in SFFA v Harvard. Conservative lawmakers, litigation, shareholder proposals, and publicity campaigns are pressuring corporations to abandon or downplay affirmative action and modify DEI programs. While the Biden administration’s EEOC has supported affirmative action, the Trump administration is expected to withdraw such support and possibly restrict the collection and reporting of demographic data to the EEOC. This rollback would impact corporate DEI programs by limiting the tools and incentives companies have to promote workplace diversity actively and inclusivity.
The changing environment underscores the importance for companies to maintain their commitment to diversity and inclusion regardless of federal support. By fostering DE&I initiatives internally, organizations can continue to promote balanced and inclusive workplaces, even in the face of fewer regulatory mandates. Proactive measures like voluntary data collection and transparency in diversity goals will play a critical role in sustaining such efforts. Companies need to navigate these changes carefully, ensuring they maintain compliance while supporting their workforce effectively and striving for the wider societal benefits brought by diverse and inclusive workplaces.
Worker Reclassification Efforts
The Biden administration’s efforts to extend FLSA protections to more workers by rescinding a previous Trump-era rule and adopting a new worker classification rule will likely be undone by the Trump administration. The reinstated Trump rule would make it easier for gig workers to be classified as independent contractors. However, state laws, particularly in “blue” states, will continue to play an important role in extending employment status to more workers. Companies operating in multiple states will have to navigate a complex patchwork of regulations, ensuring compliance with varying standards across their operational footprints.
The reinstatement of the Trump rule could lead to fewer protections for gig workers at the federal level, but progressive states might counterbalance this by enacting their own protections to extend employment status and benefits to more workers. Companies must stay informed about and compliant with state-specific regulations, which might be more stringent than federal requirements. The primary focus should be on adapting quickly to the evolving legal landscape, with legal counsel and compliance teams at the forefront, ensuring that both federal and state mandates are met while minimizing the risk of litigation and regulatory penalties.
Future Prospects
Addressing the “Always On” Culture
In the EU, there is a growing emphasis on addressing the “always on” culture, with new legislation concerning the right to disconnect emerging in countries like the Netherlands, Italy, and the U.K., along with initiatives from the European Commission. This legislation seeks to create clear boundaries between work and personal life, allowing employees to disconnect from work-related communications outside regular working hours. As more countries adopt these laws, employers will need to implement measures ensuring employees are not overburdened by work expectations during their personal time.
To adapt to these changes, employers must develop clear and enforceable policies that respect the right to disconnect. This can include setting specific times when employees are not expected to respond to work emails or calls, promoting a culture that values employee well-being, and providing training to managers about respecting these boundaries. The role of social partners in addressing productivity gaps through collective bargaining will be critical. Unions and employers must collaborate to ensure that productivity targets are met without compromising employee health and well-being. This balanced approach promises to foster better work-life integration and enhanced job satisfaction.
Corporate DEI Programs and Labor Organizing
The recent webinar delved into global compensation, employment, pensions, and governance, bringing together a distinguished panel of employment and compensation lawyers from various regions. They explored the future trajectory of employment law in light of the recent elections in the U.S., U.K., and EU. Moderated by Inge Vanderreken, the discussion featured key insights and perspectives from John Cannon, Arnold Keizer, and Gordon Bartlett. The primary focus was on anticipated major changes in employment law across different areas. Special emphasis was placed on diversity, equity, and inclusion (DE&I) as well as the reclassification of workers, addressing significant shifts that could redefine the landscape in various jurisdictions. This event provided valuable information and predictions about changes that could impact employment practices, highlighting the importance of adapting to evolving laws and regulations to ensure compliance and promote fair practices in a globalized workforce.